The Great Recession: A Year Later

This week the all-seeing, all-knowing National Bureau of Economic Research
announced that the Great Recession officially ended in June of 2009. If only
they were a little quicker on the draw. In the same month that the recession
officially ended, we penned an article entitled "United States on Clearance." To
quote from it directly:

We continue to believe that prices will be increasing in the near future
due to both inflation and the recovery of the global economy. We see signs
of these things emerging every day.

A little vindication certainly is nice every now and again.

Now, with the not-so-great recession officially behind us, fading into the
annals of history, we're ready to move on, both topically and economically.

The fact that more than a year has passed since the recession ended may prove
to be the final nail in the coffin of the argument for a possible double-dip.
As we have long-argued, this country was never poised for a double-dip, not
since the Fed took steps in inject sufficient liquidity to keep markets solvent.

While obviously this hasn't solved all our nations' problems, it did turn
what could have been a double-dip into more of an economic stagnation as recovery
dollar spending ran dry. In that sense, as we've repeatedly argued, the economy
has not declined since the initial recovery ran its course, but they certainly
haven't gotten much better either.

Before the real recovery can begin in this country - the one that will
take this country back to its place as a prominent global economic power -
some changes still need to be made.

Most notably, this country needs guidance and incentive from Washington, rather
than uncertainty, burdensome regulation, and impotent foreign policy. Another
hindrance the US could and likely will do without is another round of quantitative
easing on top of already long-depressed interest rates. Judging by the Fed's
announcement on Tuesday, QE2 sounds less than likely.

And yet, the market seems continually worried about the "imminent" collapse
of the US dollar. Every day seems to see more money piling into tradition inflation/calamity
hedges ranging from gold and Treasury Inflation-Protected Securities (TIPS
for short) to corporate and government debt.

Many major mutual fund companies continue to report substantial flows of retail
investor assets into fixed income securities (Neil Anderson, Fixed Income
Still Dominates Mutual Fund Flows...). Why investors have chosen to make
such a move as interest rates hover at 30-year lows, we may never know.

The biggest comfort about worries of the dollar collapsing, though, comes
from outside this country; from our neighbors across the pond. Some may remember
that earlier this summer the fear permeating the world's financial markets
was the prospective failure of the EU, a notion which even we did not dismiss.

Admittedly, Europe is still a long way from having worked through its fiscal
and economic woes, which are numerous and substantial, but the fear of the
EU's failure seems to have mostly subsided. So too will fears surrounding the
dollar or the breakdown of the US economy, but certainly at a higher cost to
investors.

Dock David Treece is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com)
and is licensed with FINRA through Treece Financial Services Corp. He provides
expert content to numerous media outlets. The above information is the express
opinion of Dock David Treece and should not be construed as investment advice
or used without outside verification.